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Foreign employer: Paying taxes & premiums

Do you work for a foreign company now, or are you planning to start doing this soon?

One of the first questions you probably have when you get an offer is what will be left of the offered gross salary after deduction of taxes and premiums. The answer to that question depends on the country where you must pay these taxes and premiums. Please note: where you must pay!
If you live and work in more than one country, international rules determine which country is authorised to levy taxes and premiums. Although you can use these principles to optimise the situation (e.g. agree more or fewer work-from-home days), you cannot choose which rules to apply. Be careful not to accept a pro forma calculation that is based on the wrong assumptions. Make sure that the net salary that was stated in that pro forma calculation does not turn out to be much lower afterwards. Many employers do not know exactly how this works and will ask you to come up with a solution independently.

So here’s the key themes!

First of all, it is important to realise that the answer to the question of which country is designated as the country in which you pay taxes and social insurance needs to be answered twice:
  • once for taxes and;
  • once for social security.

It is not a given that you will pay both taxes and premiums in one and the same country. In other words, the question in which country you are insured is subject to different rules than the question in which country you have to pay taxes.

For complex constructions, it is wise to seek advice in advance about where you are a taxpayer and where you have your social insurance. This does not have to cost a lot of time and money, and may prevent a lot of irritation – or corrections.

How to prevent problems

In practice, we recommend the employers who are our clients that they comply as much as possible with the law of the country where the employee is covered by social insurance, so that labour law, tax law and social security law are harmonised in a single system. This means that as an employee working in the UK with social insurance in the UK, you receive a UK employment contract from your foreign employer.

Difficult? Not at all!

It is just important to know your way around and make sensible choices. Interfisc can help you with such decisions. Would you like to know more about how that works? Then download our Employees Abroad factsheets. They contain information about regulations, labour costs and administrative requirements abroad. All factsheets are available in Dutch, French, English, and German.

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Together, solution-oriented and caring

Since 1972, Interfisc has offered international HR & Payroll solutions in the Netherlands, Belgium, Germany, France, the United Kingdom, and Italy. We do this from our offices in the Netherlands and Belgium, and with an international team of around 45 committed and caring employees. 

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